By: Craddick (Senate Sponsor - Hancock)	H.B. No. 3370
	(In the Senate - Received from the House May 3, 2017;
	May 10, 2017, read first time and referred to Committee on Business &
	Commerce; May 22, 2017, reported adversely, with favorable
	Committee Substitute by the following vote:  Yeas 8, Nays 0;
	May 22, 2017, sent to printer.)
Click here to see the committee vote
	COMMITTEE SUBSTITUTE FOR H.B. No. 3370	By:  Hancock

	A BILL TO BE ENTITLED
	AN ACT
	relating to certain disclosures and notices required for certain
	life insurance policies.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Chapter 1101, Insurance Code, is amended by
	adding Subchapter E to read as follows:
	SUBCHAPTER E. DISCLOSURES AND NOTICES RELATING TO LIFE INSURANCE
	POLICIES WITH NON-GUARANTEED ELEMENTS
	Sec. 1101.201.  PURPOSE. This subchapter is intended to
	provide standards for disclosures relating to life insurance
	policies subject to this subchapter and to recognize that a purpose
	of those life insurance policies is to provide insurance coverage
	at a lower initial premium than might otherwise be obtainable from
	the insurer if the insurer were not allowed to change the premium
	during the life of the policy.
	Sec. 1101.202.  APPLICABILITY. (a)  This subchapter applies
	to a life insurance policy issued by an insurer, as defined by
	Section 1102.001, that contains non-guaranteed elements that may
	change at the discretion of the insurer.
	(b)  This subchapter does not apply to:
	(1)  group life insurance without separately
	identifiable accounts for insureds; or
	(2)  a life insurance policy in which the insurer
	assumes all risk and contractually guarantees a death benefit in
	exchange for a guaranteed premium set at the time of the policy's
	issuance.
	Sec. 1101.203.  DISCLOSURES AFTER ISSUANCE OF POLICY. (a)
	Subject to Section 1101.204, and unless the change is made pursuant
	to a previously implemented current cost of insurance schedule, if
	an insurer increases a non-guaranteed element in or decreases the
	credited interest rate for a policy after the policy's issuance,
	the insurer must provide a written notice to the policy owner
	disclosing:
	(1)  the non-guaranteed element that is being changed;
	(2)  the value of the non-guaranteed element before and
	after the proposed change;
	(3)  the maximum or minimum guaranteed value, as
	applicable, of the non-guaranteed element stated in the policy, if
	any;
	(4)  the effective date of the change;
	(5)  a comparison of the change to the current and
	maximum or minimum guaranteed elements, as applicable, if any,
	stated in the policy; and
	(6)  the options available to the policy owner under
	the policy.
	(b)  The notice under Subsection (a) must include the
	insurer's phone number and e-mail address and the following
	statement in at least 12-point bold type:
	"IMPORTANT NOTICE: An increase in a non-guaranteed element or
	a decrease in the credited interest rate will have an adverse impact
	on the longevity and value of your policy. You should request an
	illustration of the impact of this change on your policy."
	(c)  Except as provided by this subsection, notice required
	by Subsection (a) must be given not later than the 90th day before
	the date the change is applied.  For a decrease in the credited
	interest rate for a policy, notice required by Subsection (a) may be
	given at the time that the decrease is applied.
	(d)  If a policy owner affirmatively requests a loan, partial
	surrender, or other action on the policy that might impact the
	longevity of the policy, the insurer must provide to the policy
	owner in writing, not later than the 10th day after the date the
	owner makes the request, the insurer's phone number and e-mail
	address and the following statement in at least 12-point bold type:
	"IMPORTANT NOTICE: Your recent request will have an impact on
	the longevity and value of your policy. You should request an
	illustration of the impact of this change on your policy."
	(e)  Regardless of whether any non-guaranteed elements are
	changed, an insurer that issues a policy subject to this subchapter
	must provide to the policy owner at least annually an illustration
	containing elements specified by the commissioner by rule.
	Sec. 1101.204.  NOTICE TO DEPARTMENT OF CERTAIN CHANGES TO
	NON-GUARANTEED ELEMENTS.  (a)  Not later than the 180th day before
	the effective date of an increase in a non-guaranteed element in an
	individual's policy or certificate subject to this subchapter,
	other than an increase pursuant to a previously implemented current
	cost of insurance schedule, the insurer must provide notice to the
	department if:
	(1)  except as provided by Subsection (b), the increase
	in the non-guaranteed element will result in an aggregate increase
	in the cost of insurance rate that is greater than 40 percent of the
	cost of insurance rate for the preceding year; and
	(2)  the increase will be applied to a policy issued in
	this state.
	(b)  The commissioner by rule may adopt a lower percentage
	increase in a cost of insurance rate for which an insurer must
	provide notice to the department under Subsection (a), but the
	percentage adopted may not be lower than 20 percent.
	(c)  The notice under Subsection (a) must include:
	(1)  the specific approved policy form for which the
	insurer will implement the increase;
	(2)  a copy of the disclosure to be provided under
	Section 1101.203 to each owner whose policy was issued in this
	state;
	(3)  information on the classes of owners who will
	receive the disclosure;
	(4)  sufficient information for the department to
	determine if the increase is actuarially justified;
	(5)  if applicable, sufficient information to
	demonstrate compliance with the nonforfeiture values under Chapter
	1105 for the increased premium; and
	(6)  any other information necessary to determine if
	the increase will comply with the standards in this code.
	(d)  Not later than the 60th day after receipt of a notice
	under this section, the commissioner may:
	(1)  disapprove the proposed increase if the
	commissioner determines that the increase is not actuarially
	justified or not in compliance with this code and provide the
	insurer with a description in adequate detail of the changes
	necessary to avoid disapproval; or
	(2)  withdraw approval under Section 1701.055 of the
	applicable individual life insurance policy form.
	(e)  If the commissioner does not take action under
	Subsection (d), the insurer may provide the disclosure required by
	Section 1101.203 and apply the proposed increase in the
	non-guaranteed element in the policy.
	Sec. 1101.205.  RULES. (a)  The commissioner may adopt rules
	as necessary to implement this subchapter.
	(b)  The commissioner by rule may exempt certain types of
	life insurance policies from one or more of the requirements of this
	subchapter.
	SECTION 2.  Subchapter E, Chapter 1101, Insurance Code, as
	added by this Act, applies only to an increase in a non-guaranteed
	element or a decrease in a credited interest rate that is applied to
	an insurance policy on or after January 1, 2018.
	SECTION 3.  This Act takes effect September 1, 2017.
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